when they were in. the overrun of the problem by simply letting a depression happen in the 1930's the credit market really trying and of course that made for a depression right flat out well there's no willingness to do this at this point and what they're trying to do they're not solving the problem of overindebtedness in any meaningful way so what everybody has to wonder are they going to solve it with inflation or we're about to see inflation and parents that are clearly they're getting rid of the penny of the nickel and john you're worried and they're going to for it's going to be requiring prices to be priced to the nearest ten cents that's going to create a sense on the part of the public of inflation coming and then that jeopardizes the whole approach to doug that's interesting and some do believe that the fed is trying to inflate its way out of debt that it's the only politically possible way to do so in this country which brings me to the modern debate we hear so much about

the fiscal cliff it is what the modern debate over the fiscal the country's fiscal problems and partially economic problems are centered around currently and that has really been centered around the issue of taxes for the top bracket some other things in there too but really this issue of let's play a clip of some of the key talking points. we're going to have to see the rates on the top two percent go up and we're not going to be able to get a deal with out of our members believe strongly that raising tax rates will hurt you come to new polls. especially if. you're a well three is a better way to raise this revenue then raising rates. ok so they don't agree on taxes for the top two percent of the country but bigger picture is this a thin representative of any kind of transform ational issue that will save the u.s. economy or the ten flavors of. debts that have accumulated to such

a great extent well. the little snippets of debate between the pros of the republicans in congress i think the whole thing has a major element of farce. the democrats really don't want to cut spending very much they know and that's a huge part of the problem the republicans don't want to raise taxes on the top profits they know that's coming but i don't want to would admit they know what's coming but the number of them know it's coming from the democrats in the united states almost as much and sometimes even more money from the richest americans of the republicans to both sides refuse to acknowledge that they are basically in hock to interest groups and that they can't begin to confront this crisis had wrong meaning the economic crisis or the. deficit crisis.

the lock of the ability to really get a serious recovery going as long as that much there are a lot of studies showing that the higher the debt a lot of those the low should really have a growing economy kenneth rogoff and carmen reinhart came out with that salary debt overhang to yeah so i mean just that so then what do you think are the lessons from seventeen seventy five you know we're winding see what was going on and fast forward to today what can we learn from from the politics of the time and the bold moves of the dime that they can inform the u.s. that is. facing such economic problems well. barack obama. was acquainted with some of the larger dimensions of the problem of how other countries like the british and the dutch previously had gotten in this kind of trap and he was well aware that he decided to take a somewhat happy talk if you won two thousand and nine. because the democratic

politicians convinced them to get on the right track with democratic economics and will solve the problem so he has backed away from facing this seriously i don't think that the republicans facing it at all seriously here they are to much to march in the hawk of their upper bracket groups and i don't think unfortunately seventeen seventy five or six has much of a lesson that politicians who can't appreciate what's happened to some of the other countries more recently aren't going to go jumping back and look at what was going on in the seventeen seventy five or seven hundred seventy six i've spent a long time in politics and i don't do it anymore but believe me they do not read history books said they i mean you talked about in seven hundred seventy five you know that what you took away from it was how much was needed in terms of really difficult politics and and hard talk and raising tough issues and that that was

really needed to make progress but i don't see that it would no i don't think there are even confronting the framework involved now in fairness back in seventeen seventy five and seventy to seventy six the colonies world blige to confront the problem this time of the tried to run a wire but in general i come from of the problem what they're doing now is not confronting the problem and i don't believe that any history or any lessons from history are going to jar of them and in fairness when the british were facing similar problems they didn't confront this they knew about precedents from holland and they didn't confront it the dutch couldn't confront it before conferees can't tackle these things because they go to the heart of a build up of interest groups and failures over a century or at least two or three general. it's politicians can't cope with that

sort of thing so do you think it would take another not a war like we saw in the american revolution perhaps but i know there are economic crisis or financial crisis to force more action and would it be action do you think based on your knowledge of politics in the right direction or further down the wrong road or you were asked you know exactly the right questions here the crisis is probably necessary and we assume a crisis will focus the right time remedy in the right time with concern i'm skeptical i think it would what it would bring would be a new round of floundering some partial responses but one of the lessons of history which leads me to think that nobody will solve the problem is that the previous nations facing comparable problems could never really cope with that and i do think that unfortunately the best guess as to was solution here is to work in flight and deal with the oil. history suggests that doesn't usually work are there for other

reasons interesting when you're talking about those countries in similar situations what would you be comparing it to like the british empire as well there are people to deal with and all this is a matter of history and economic history generally suggests the immediate predecessor was britain the previous protests in the seventeenth and early age in some sort of with a dog like one new york was a new amsterdam. kevin phillips after the break on deregulation and some more of the modern financial issues but if you really want to delve into the history of seven hundred seventy five and the currency and trade issues at play then check our you tube channel for a web exclusive because we did probe more into that also still ahead alan greenspan talked to bloomberg today about the fiscal cliff what else but a long term deficits maybe we agree with them find out what he said in these chains but first the closing market numbers.

culture is that so much about the taxpayers' money and it is a shame if the bottom people have areas to rise and fall of civilizations for over a century they have been predicted of western decline given the global financial crisis that started in two thousand and. two we speak your language any time of the war not advance the. news programs and documentaries in spanish matters to you breaking news a little tonnage of angles kid in the stories. you hear. the choice all teach spanish find out more visit eye to eye ball tito's comb.

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welcome back we are speaking with kevin phillips or when i spoke to him earlier and now though he was a republican political strategist he now is very critical of both parties and one reason progressive has been

a big fan is because he's been hugely critical of financial deregulation over the years i had to ask him about it take a listen. let's go through first some of the history of deregulation and money let's play a couple of clips. i have the rest of the secretary of the treasury to take the action necessary to defend the dollar against the speculators. i have directed secretary connally. convertible with a dollar. or. true problems of our nation a much deeper. than gasoline lines or energy shortages these are even an inflation recession i need your help. so you have nixon taking us off bretton woods once and for all carter marking a period of horrible stagflation that paved the way for a massive deregulatory measure in the form of the monetary control act and then here you have bill clinton after he had signed the repeal of glass steagall with

his cronies babying the way to too big to fail and then here is george w. bush after he had signed the bill named bankruptcy abuse prevention and consumer protection act of two thousand and five which i would say ils ill named because it actually made declaring bankruptcy more difficult so we've heard you talk about deregulation i want to get to that but first i don't think i've heard you talk about how you feel about the end of bretton woods and the move finally away from commodity based money and to a debt based currency system which is allowed for really this unprecedented accumulation of credit and ten flavors of debt well somebody could do a very effective book on the united states and go over the various stages but i don't see the movement toward from britain wards quite the significance of that others do because that was one of the it was a war. change. there's some surely what you have. closed the gold one of the fraser seventy one the united states was not really still on

gold standard until the point that it was just modifying the end of the gold standard to be a complete end of the gold strike and we had started the printing press dollar. but other countries have had printing for us currency and other wires. i think i agree that the downhill slope started in a major way during the sixty's and seventy's but the war in vietnam was responsible for a lot of the economic dislocation and the extent to which inflation was coming and the dollar weakening and that was on the financial thing that was a mistake in foreign policy and what you get when you look at the conferees when they get in this kind of pickle it's generally been a failure of more than financial policy it's been a failure across a broad range just for example look at pictures of the pros of instilling this now

only war presidential aspirant i didn't support him but he did do this in charge and everything ross perot and member a whole world and we put up these people have never gone to the heart of any of the crises they've been describing they've never explained how they've started they've never shown what was involved they just say all we've got a major crisis here and i want to take a firm stand you know and then we get a policy and then ten years later somebody else wants to take a firm stand without explaining what it is that's happening right that's what happened what would you say is the core problem that has been happening that's led to this well i would say of a core problem at this point is the united states is a declining world power there's not able to deal with the sources of its decline which are economic economic. poor foreign policy that expects to play policeman for the world without anybody wanting us to win without being able to afford it. we're trying to support the dollar as the world's leading

currency and i doubt that that's possible anymore oddly enough the dollar is but better supported by crisis than by anything else ironic. because this is a haven so then in terms of just deregulation to end on it why do you think it is that republicans and democrats haven't. so wholeheartedly as the ethos of the best thing for the economy you know notwithstanding the more recent times where we have seen to try and bring back those regulations even though it's not been totally successful. your issue. the purge to a certain extent when they were beginning they were real rise into the sunshine during the victorian years in the middle of the nineteenth century didn't move away from one of the been a marcum to list pattern even as late as the early nineteenth century and they cut taxes and they did deregulate but that was in

a period in time one of laissez faire was spreading around the world and was a movement to get rid of old structures from another era i don't think the deregulation has anything like a framework of historical justification at this point. it's sort of came out of reagan and thatcher and is now being prolonging it in a way that i think what you're seeing in asia for example is the rise of state capitalism and i don't think it's the regulators are still regulation compared with communism and some of the old mistakes but this notion that deregulation that's an anglo-saxon policy and even the british don't push it so much anymore. i don't think the deregulation is the word that's being used broadly but in terms of rolling back tax is giving business

a chance to solve the problems this is all republican rhetoric i mean i've seen this sort of stuff for fifty years now and this isn't the first time and i won't be the last time once a generation that's liberate the economy cut taxes if they don't regulate and that you think misguided i think it's stale i don't think this is a solution and i don't think the democrats where their solution about spending more money. coming back to all these programs that they always want all these programs and the republicans always want to liberate business neither one works. as far as what does work i. i asked mr philips and he said i don't know if there is anything at this point so sorry not a more positive note to end on but lots of nuggets there of good thought from kevin phillips former republican strategist author of seven hundred seventy five.

you know what time it is time for word of the day where we break down a term or concept for our smart viewer but maybe not the financial expert i have a penny here from one nine hundred seventy one you'll find out why i'm keeping this baby i'm not going to spend it in a moment because given our conversation about money and coinage with kevin phillips we touched on it the word of the day is gresham's law so what exactly is it according to a vested pedia it is the following a monetary principles stating that bad money drives out good money but it's a bit more complicated that bad versus good because what does that even mean so let's take a look at what it means if a new coin is issued and a legal authority such as a government artificially overvalues this new money says this is good for x. amount and undervalues another then as more and more of this new currency enters

the system people actually take their old undervalued coins and pull them out of circulation so my nine hundred seventy one penny on what i want to keep in here is why one recent example is when the composition of the penny changed in one thousand nine hundred two so the pay was five percent copper and five percent zinc so here is the composition back in one thousand nine hundred two then it was changed though they flipped it around two point five percent copper and ninety seven point five percent zinc and now the value of the older pennies my nine hundred seventy one penny counts is well over two cents which is why we see things like this. works in pennies by. that time he has big money clients storing huge sharks of many inquiries from hundreds fronts and i'm wondering. now i do want to tell you i'm sorry to disappoint you but in two thousand and six the u.s. mint did pass a rule that banned melting coins due to rising metal prices and it's illegal to

transport more than five hundred pennies out of the country as well try getting those thirty s a anyway but in two thousand and seven the mint issued a press release stating why there is concern they said that speculators could remove pennies and nickels from circulation and sell them as scrap for profit so there you have it in action but here is an older example of gresham's law in the seventy's an eighteenth century great britain was on a silver standard but when the master of the man sir isaac newton there is a fine looking fellow he established a new meant ratio of silver to gold which overvalued gold and undervalued silver and you can imagine what happened as i explained what happens under this law this is over began to disappear and gold flowed into the country now gresham's law can be applied not just to money but to more than that to perhaps politics and forms of capitalism as well where the cream never rises to the top in fact it goes towards the lowest common denominator but that's where some blogs are where the day.

ok let's wrap up with loose change dimitri let's talk about central bankers it's your favorite topic out wrong there my favorite people there so alan greenspan very famous former one spoke out on whether a painless solution can be found to avoiding the fiscal cliff ever do sing us long term deficits take a listen. the presumption i'm going to have a plane with fruit from truth i think is fantasy. so he said it's fantasy that there is going to need to be economic pain in reducing long term deficit i agree with him on that i'm glad he's going to be alcoholic and

i'm glad he's out saying things like this whether to become mr realism whether you become mr lanolin left office yet he was no longer i don't know it official. this. you know alan greenspan has gotten off the hook. if there's one person that's walked away when the financial crisis happened like he got a little bit of flack but that's it you know he hasn't got and still of there are a lot of. you know you couldn't do didn't know what industry should be or whether they were too hard too low i'm just i think there's one guy that's gotten away with more like bush did a lot. i know i think that this i think i'm i think it's unfortunate that the fiscal cliff has become such a din of coverage because i think major points are lost and it's interesting one that i want to highlight that is worth noting so steve king our guests are a frequent guest was actually on the hill yesterday for a congressional briefing with members of congress who brought him in to do that and

he was talking about how based on historical precedent what you could see with the fiscal cliff in terms of cuts dimitry to the public sector are not so much the impact of those public sector cuts but the impact on the private sector that may begin to leveraging once the government starts cutting what a shock yeah this is shocking news if you guys going over this one of no you're not watching the show i mean. yes this is true this is actually one hundred percent ok there is a private liability yes but what i think is interesting is because it's a republican talking point that businesses are holding off on spending because of uncertainty because of what's going to happen with spending but yet steve can i think many would would would characterize a lot of the ideas as more of a lefty economist so there you have. they're saying the same thing in the middle not meeting in the middle saying the exact same thing but i don't mischaracterize anybody here so let's move on because we just have a minute and i'm not going to play a clip i just want to address that deutsche bank is being probed by the f.c.c.

for hiding till billion dollars in derivatives lost in a way they say this is old news one of the interesting points the wall street journal made is that they were a bank that did not take state aid during the crisis when i said doesn't this. the ability of banks to muddle through just by these losses you said that's not true and that's why it's bogus because that your bank i do remember i haven't had a chance to check this but they were top may be second or third on the list total for. bailouts also if all your counterparts are or insolvent or a majority are and then they're getting bailed out also then that's also a bailout for you so if you're part of a interconnected system where which is generally over leveraged even if you yourself are a good player you're still in big trouble but but also there's a right to get bailed out and parquet hard wasn't a bailout ok it was in the it was the it was the idea that the government was going to solve the problem but i have to stop because we're out of time but i hope i can offer you a penny for your thoughts i'm going to do me any good unfortunately i'm not surprised that not only having time for thank you for watching be sure to come back

tomorrow in the meantime you can follow me on twitter at war unless there watches on you tube or hulu check in on our you tube because as i said you can watch the full seven hundred seventy five view on their web exclusive and have a great night. see good leverage or. was to build the world's most sophisticated robot which on fortunately doesn't give a dollar amount anything mission to teach creation why it should care about humans . this is why you should care only on the.

experience before serious to. survival for service. so. close to. the nation the forthcoming. to make. chimp on the fly a. wealthy british. market . find out what's really happening to the global economy with. no holds barred global financial headlines. is

a report. you

know how sometimes you see a story and it seems so horror lengthly you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture.